Does a family foundation protect heirs from legitim claims?

A family foundation does not automatically protect against legitim claims, and in certain situations it can itself be sued for payment.

A family foundation is sometimes presented as a way of protecting against legitim claims (zachowek, the statutory reserved share). This is a simplification, and one that may be accompanied by adverse consequences for the heirs. The provisions introduced in 2023 together with the Family Foundation Act do not absolutely exclude assets contributed to a foundation from the legitim base.

Does contributing assets to a foundation place them beyond a legitim claim?

Not immediately. Under Article 993 § 2 of the Civil Code, when calculating the legitim, the founding fund contributed by the deceased is added to the estate, unless the foundation was established in a will. Article 993 § 3 of the Civil Code also requires the addition of assets received in connection with the dissolution of the foundation, up to an amount not exceeding the founding fund.

Merely transferring assets to a separate legal person therefore settles nothing. The value returns to the base for calculating the legitim, from which the fraction due to the entitled person is calculated: half the value of the share in the estate, and two thirds if the entitled person is permanently unfit for work or if the entitled descendant is a minor (Article 991 § 1 of the Civil Code).

The method of valuation also matters. Article 995 § 3 of the Civil Code requires the fund to be calculated according to its state at the time of transfer, but at prices as at the time the legitim is determined. With real property and shares in companies, this means that any increase in value after the contribution enlarges the legitim base.

For how long is the founding fund added to the estate?

Article 994¹ § 1 of the Civil Code provides that a founding fund contributed more than ten years before the opening of the succession is not added to the estate, unless the family foundation is an heir.

It is worth comparing this with an ordinary gift. Article 994 § 1 of the Civil Code excludes from the calculation gifts older than ten years, but only those made to persons who are neither heirs nor entitled to the legitim. A gift to a child is therefore added regardless of whether ten years have passed.

With the founding fund there is no such qualification. What counts is the lapse of ten years and whether the foundation does not inherit. This is the only element of the structure that genuinely limits the legitim, and at the same time the reason why contributing assets to a foundation should be considered from many angles, not merely tax ones.

Article 994¹ of the Civil Code also provides for two further exclusions. A fund transferred at a time when the deceased had no descendants is not added when calculating the legitim due to a descendant (§ 3). This does not apply, however, where the transfer took place less than three hundred days before the descendant was born. A fund transferred before a marriage was entered into is not added where the legitim is claimed by the spouse (§ 4).

Can a foundation be sued for the legitim?

Yes, and this too is sometimes overlooked. Under Article 1000 § 4 of the Civil Code, if the entitled person cannot obtain the legitim from the heir or from the person in whose favour a specific bequest was made, they may claim payment from the family foundation whose fund was added to the estate. It should be noted that the foundation is liable within the limits of the enrichment resulting from the funding of the founding fund.

Analogously, Article 1000 § 5 of the Civil Code allows a claim to be directed at persons who received assets in connection with the dissolution of the foundation, although they may discharge themselves by handing over those assets (§ 7). A claim against the foundation becomes time-barred five years after the opening of the succession (Article 1007 § 3 of the Civil Code).

Article 8(1) of the Family Foundation Act applies separately. The foundation is jointly and severally liable with the founder for the founder's obligations arising before its establishment, including maintenance obligations, and that liability can be neither excluded nor limited without the creditor's consent.

What can genuinely reduce the legitim?

It is worth looking at the institutions that affect the amount of the legitim and the manner of its payment.

Article 997¹ § 1 of the Civil Code allows the person liable to request a deferral of the payment date for the legitim, payment in instalments, and in exceptional cases a reduction, taking into account the personal and financial situation of both parties. The instalments may not exceed five years in total, and in cases deserving particular consideration the court may extend that period to ten years (§ 2). A reduction is not final: once the circumstances justifying it have ceased, the entitled person may claim repayment of the amount by which the legitim was reduced, no later than within five years from the date of the reduction (§ 3).

Further, Article 996 § 2 of the Civil Code sets off against the legitim any benefits from the family foundation and any assets received in connection with its dissolution that were transferred to the entitled person. Article 997 § 2 of the Civil Code sets off against a descendant's legitim the cost of maintenance obligations performed by the foundation, in so far as they exceed the average measure.

Article 35(1) of the Family Foundation Act completes the picture: a beneficiary who is to receive from the foundation the sum needed to supplement the legitim loses the right to benefits and to assets on the dissolution of the foundation in the part corresponding to that sum. One cannot therefore take the legitim and retain a full position as a beneficiary.

What does this mean in practice?

A family foundation is not a form of protecting particular persons from the legitim. With properly planned action, however, taken well in advance, it gives the founder the ability to influence matters concerning the legitim after their death.

It must also be said plainly what we still do not know. Family foundations have been able to be established since May 2023, so the first ten-year windows under Article 994¹ § 1 of the Civil Code will close in 2033 at the earliest. Until then this mechanism will remain largely untested in court practice, including as regards the method of valuing the fund for legitim purposes.

The practical conclusion is fairly simple. A family foundation makes sense as part of a well-considered succession plan, prepared in advance and taking into account who will be entitled to the legitim and in what amount.

The presence of a family foundation in a case for payment of the legitim changes the whole picture: the base from which the claim is calculated is different, the circle of debtors is different, and the time limits are different. Therefore, regardless of whether you appear as a founder, a beneficiary, or a person entitled to the legitim, every such case requires separate and meticulous analysis.